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6 Feb 2014

Charting the Future of Indian Shipping

The merchant navy is a vital element of any nation’s economy. Like any other industry the India maritime sector has also witnessed major structural changes in the past fifty years. The maritime industry in modern era has truly evolved in the post independent era. Indian shippingfleet constitute 1162 vessels of 10.3 million GT (15.3 million DWT) and the Indian flag isranged 18th in the world.

The National Maritime Day is celebrated on 5th of April every year since the year 1964. This day is commemorated to mark the sailing of the fist Indian flagged ship “S.S.Loyalty” which sailed from Mumbai on this date in the year 1919. The Day is meant to be a celebration of hope, optimism, and search for those possibilities that make way for the shipping industry to surge forward.

Coastal Shipping and Inland Waterways

Shipping is the most economical and environment friendly mode of transport when compared to read and rail. India is blessed with over 7500 kms coastline and has a wide network of rivers in many parts of the country. Domestic shipping offers significant advantages over road and rail transport in terms of fuel and cost savings. It is estimated that from a cost perspective, shipping costs 21 percent of that by road and 42 percent of that by rail.

India trade can therefore utilize these modes for meeting its requirement of cost effective transport and as service providers we need to build up the coastal and inland shipping network. It is also the most environment friendly mode of transport. Increasing delays due to high road and rail congestion is driving companies to transport their goods via coastal shipping.

However, as compared to other emerging and development countries, India’s coastal shipping potential remains significantly underutilized. Petroleum, oil and lubricants (POL), coal and iron ore are the three major commodity categories that account for the bulk of coastal cargo movement and there lies immense potential to ship other cargo categories through ships.

The Directorate General of Shipping and the Inland Waterways Authority of India has announced series of measures for promotion of waterways as the preferred mode of transport and going ahead the trade would use this mode as the preferred option. The port infrastructure needs to be developed so that three are a number of ports in inland regions which can accommodate small vessels. There is a requirement of small areas along the riverbank with jetties capable of handling barges.

Next, tariffs have to be rationalized for coast vessels so that they are able to compete with roadways. Whilst trucks and trains run on subsidized diesel, coastal and inland waterway ships do not get any subsidy on fuel and hence operational costs are high. Such anomalies should be rectified to make shipping competitive. Finally, rivers should be dredged to have even draughts for long haul movement.

India is home to 14,500 km of navigable inland waterways, of which 36% of major rivers and 3% of canals are conducive to the movement of mechanized vessels. There is a need for a comprehensive coastal shipping policy document which can encompass the above issues amongst others and provide a facilitative regime for development of this sector. The benefits that would accrue in reduction of logistics cost of goods and reduction in carbon emission would be immense.

While India has a huge coastline of 7,500 kms, it also has a vast hinterland to cater to. The huge expense of India’s geography can be accessed through inland waterways wherever possible. By far shipping is the most economical mode of transport and optimum transport over long distance can be the one which has a mix of ships with road or rail as ships cannot serve inland destinations directly. Hence there is a need to have more coordinated policy applicable across all means of transport.